The absence of ads would lead to some 378 million fewer magazine sales each year.
Without advertising, much of the UK’s media, culture and sport would be “unsustainable” in its current form, according to a new report issued today.
The Deloitte study – Advertising Pays 3 – produced on behalf of the Advertising Association (AA), examined how adspend and brand sponsorship impacts the media, entertainment, arts and sport industries and found that people value access to these ad-funded services at nearly £10 billion.
By lowering the cost of media and culture, the authors state, advertising brings it within reach of millions more people than would otherwise be the case.
“Of course, businesses advertise to build brands, drive sales and fight the competition – not to fund our media,” said Andy Duncan, AA president and CEO of Camelot UK.
“But the unintended consequence of advertising is a massive contribution to the TV we watch, the newspapers we read, the attractions we visit and much more. Without advertising to fund them, it is clear that the average UK household would be unable or unwilling to cover the shortfall.”
The Deloitte report estimates that advertising accounts for around half of the newspaper industry’s revenues, so it could be argued prices would have to be twice as high in the absence of advertising.
Based on Deloitte’s estimates of how consumers would react to a price increase, the authors estimate newspaper sales could fall from 91 million to as little as 20 million each week.
In consumer magazines, the absence of advertising would lead to some 378 million fewer magazine sales each year, the report suggests.
The Advertising Association estimates that the gap between what people are willing to pay and the true cost of the advertising-funded media they receive is almost £5 billion, equal to £187 per household per year.
“The advertising industry makes a significant contribution to our economy,” added Sajid Javid MP, Secretary of State for Culture, Media and Sport.
“Its funding is vital for the long-term growth of the UK’s creative sector and ensures we are able to provide the quality recreational and cultural services that people value so highly.”
